U.S. Multinational Encounters Resistance in India

By William Pomeroy, in People's Weekly World8 July, 1995, pg. 10.

LONDON - The investment drive into
India by U.S. multinational corporations,
which has accelerated since the Congress
Party government opened the doors in 1991
to foreign entry, has been given a severe
check in one of the leading industrial states.

Encountering unexpected nationalist
opposition is the biggest U.S. investment
project in India, the $920 million Dabhol
power plant in the state of Maharashtra,
which has Bombay as its industrial center
and capital. Heading the consortium that
was handed the contract last year by a
Congress Party state government is the U.S.
Enron Development Corp. which has 80
percent of the stake; Bechtel, handling the
construction, has 10 percent and General
Electric, providing the turbines, the other 10
percent.

Indian industrial interests insisted that
the foreign investment reform follow the
pattern of joint ventures with Indian companies.
The Dabhol contract broke this pattern.
It brought to a head simmering national opposition
to a reform policy charged with
selling the country to foreign interests.

In March, a state election in Maharashtra
ousted the Congress Party from power. It
was won by a coalition of two right-wing
nationalist parties, the Hindu nationalist
Bharatiya Janata Party (BJP) and the extremist
Shiv Sena. The nationalist alliance
accused the Congress Party of selling the
state to foreign multinationals, and of corrruption
in doing so.

People in Maharashtra have been especially
aroused over excessive guarantees
given to Enron of at least a 16 percent return
at the minimum, with 24 percent or above
more probably. This would lead to much
higher electricity prices, adding to unrest
over rising prices that have accompanied the
reform progam in general.

The BJP - Shiv Sena victory and the
threat to cancel the Dabhol contract that has
arisen from it, have given a shock to foreign
mulinationals, and sent a natiionaIist current
through the rest of India.

The U.S. energy department in June
warned that a cancellation of the Dabhol
contract would "jeopardize most if not all of
the other power projects being prepared
for international financing." This
statetment caused an angry reaction across
India. The staid Hindustan Times editoriaIized
that, "It is time the West realized that
India is no banana republic which has to
dance to the tune of the multinationals.

Supporting the stand of the new government
in Maharashtra is a strong coalition
of forces among the people. It includes trade
union and middle class strata that are
against multinational intrusion and against
privatized power supply.

Maharashtra has already approved
more foreign investment than any other
state and a quarter of the total for India,
reaching $1.I bllion in the last calendar
year.

To the nationalsts, Dabhol is a wedge
that can lead to a broadening domination.

On June 19 a nationwide strike was
launched by teIecommunication workers
against the inviting of foreign competition
in the state-run telecom industry. The Commmnist
parties have been holding demonstrations
against multinational entry from
the time the policy was initiated.